NJ Panel Takes Aim at Misclassification

Trenton, NJ (WorkersCompensation.com ) - Misclassification of workers has increased by an estimated 40 percent in the last 10 years, according to a new report. “This increase can be attributable to the ‘fissured workplace,’ where firms distribute activities through an extensive network of contracting, outsourcing, franchising, and ownership in an effort to limit legal exposure and increase profits; and is marked by declining wages, eroding benefits, inadequate health and safety conditions, and ever-widening income inequality.”

The New Jersey task force’s first report on employee misclassification says in attempting to gain a competitive advantage through misclassification, workers are deprived of various rights, including workers’ compensation coverage if they are injured on the job. The panel, established by Gov. Phil Murphy last year, calls for several changes to combat the problem:

• Targeted education and public outreach, including creating of a hotline, webpage, and email address to report misclassification, and a requirement for employers to post notices alerting workers to the issue
• Strengthening state contracting, by requiring  entities that contract with the state or receive state funding to confirm that they are aware of the legal standard for proper classification of workers based on the ABC test, with potential loss of funding or contract termination if misclassification is found.
• Interagency coordinated enforcement.
• Data sharing share information between agencies subject to any applicable confidentiality requirements.
• Cooperation with neighboring states
• Cross-training for field investigators from various state and local agencies.  
• Criminal referrals of cases to the office of the attorney general for criminal prosecutions as appropriate.
• Utilize workers' compensation laws to bolster misclassification enforcement.
• Use the state’s department of labor’s power to revoke and suspend licenses laws.

One legislative recommendation, to give the DOL the ability to issue stop-work orders, has been signed by the governor. SB 2557 changes previous law, that said the department could issue the stop work orders only after repeat offenses by construction companies.

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